John Doe buys 125 shares of Microgen Inc. at $35 a share and holds the stock for a year. Patricia Smith buys 200 shares of Microgen Inc. for $32 on margin. The margin requirement is 65% and the interest rate on the borrowed funds is 8%. If they both sell the stock for $47 after a year, what percentage return does each investor earn?
John Doe buys 125 shares of Microgen Inc. at $35 a share and holds the stock for a year. Patricia Smith buys 200 shares of Microgen Inc. for $32 on margin. The margin requirement is 65% and the interest rate on the borrowed funds is 8%. If they both sell the stock for $47 after a year, what percentage return does each investor earn?
Chapter5: The Cost Of Money (interest Rates)
Section: Chapter Questions
Problem 4PROB
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Transcribed Image Text:John Doe buys 125 shares of Microgen Inc. at $35 a share and holds the stock for a year. Patricia Smith buys 200 shares of
Microgen Inc. for $32 on margin. The margin requirement is 65% and the interest rate on the borrowed funds is 8%. If they both
sell the stock for $47 after a year, what percentage return does each investor earn?
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